Jio Users Might Face Disruptions if RCom Deal Fails to Go Through

The deal will include a cash payment and transfer of deferred spectrum installment.

(Photo: Reuters)

A report by The Economic Times suggests that Reliance Jio subscribers could face disruptions in services in some key markets, if the telecom company fails to buy spectrum from Anil Ambani's Reliance Communications. The deal, if not materialised, will also push Reliance Communications into insolvency, experts and analysts told ET.

The deal is important since Jio is dependent on RCom to create sharing spectrum blocks of five units in the 800 MHz band - the minimum spectrum required for 4G LTE services.

Some markets that might be affected if the deal goes south are:

• Andhra Pradesh
• Karnataka
• Tamil Nadu
• Kerala
• Delhi
• Maharashtra
• West Bengal
• Gujarat
• Madhya Pradesh
• Himachal Pradesh
• Bihar
• Odisha
• Assam

In Andhra Pradesh, Tamil Nadu, Kerala and Karnataka, Jio holds 3.8 units of 4G airwaves in the 800 MHz band and is dependent on RCom's spectrum in the same band for LTE network.

The deal was inked in 2017, which would have seen RCom sell 122.4 units of 4G airwaves to Jio, including the 800 MHz LTE spectrum that it acquired from Sistema Shyam Teleservices, which has a longer validity period.

This deal will cut RCom’s Rs 46,000 crore debt by a significant Rs 18,000 crore, helping it beat the insolvency proceedings also.  

The deal is crucial to Jio in the sense that it affects a huge number of markets for the leading telecom operator. On the other hand, for RCom this is one souce of easing the debt burden.

However, if the deal does not work, Jio will have no option but to continue its 21-circle spectrum sharing pact with RCom, the ET report said. They currently have airwaves sharing pacts across 21 circles excluding Jammu and Kashmir.

(With inputs from The Economic Times.)